Minority-Owned Firms Hurt by Pandemic to Be Focus of SBA Nominee

The Paycheck Protection Program, the federal government’s main form of coronavirus aid for small businesses, will be a focus for Ms. Guzman, an Obama administration alumna who served most recently as director of California’s Office of the Small Business Advocate. President Biden has said an equitable distribution of small-business aid is a priority as his administration seeks to address racial and economic inequality.

Lawmakers from both parties have praised the program for providing a vital lifeline to small businesses during the pandemic. Still, it has faced scrutiny over potential fraud and concerns the loans weren’t sufficiently reaching mom-and-pop and minority-owned firms.

Those concerns followed the program’s rocky rollout last spring, as businesses without existing relationships with lenders—which issue the loans—struggled to access the program early on.

The Trump administration took steps to address the issue, including earmarking funds for community lenders, which tend to have strong ties to minority communities and very small firms. When the program reopened last month, only community lenders issued the loans initially, which the SBA said was part of an effort to ensure access for women, minorities, veterans and underserved communities.

More recently, lenders have said glitches in the SBA’s loan-approval process were slowing down their ability to move borrower applications forward.

In her prepared testimony, Ms. Guzman plans to say she would ensure the SBA has “the right systems, technology and operating processes in place to advance its mission” if she is confirmed.

The Paycheck Protection Program offers loans for payroll, overhead costs and other eligible expenses. The loans are forgivable, provided recipients spend most of the money to pay workers. It reopened last month with $284 billion in funding, after an initial run from last April to August that distributed about five million loans totaling $525 billion.

The SBA has approved roughly $73 billion in PPP loans to both first- and second-time applicants since the initiative reopened, according to the most recent agency data.

Ms. Guzman served as deputy chief of staff at the SBA under President Obama. In California, her home state, she helped implement a grant program for businesses affected by the pandemic. Ms. Guzman has said she became interested in entrepreneurship as she grew up, working alongside her father at the family business, a veterinary hospital.

At the SBA, she would also be responsible for several other relief initiatives authorized by Congress as part of the coronavirus stimulus package passed last December, including a $15 billion grant program for concert halls and other live venues.

Ms. Guzman’s task list could grow longer still if President Biden’s small-business proposals for the next coronavirus stimulus package come to fruition. Mr. Biden’s $1.9 trillion plan calls for $15 billion in flexible grants to small firms and $35 billion in funding for small-business lending and investments.

During the hearing, Republican senators will likely question Ms. Guzman on how raising the federal minimum wage to $15 an hour—a move Mr. Biden supports—could affect small business, according to an aide to the GOP members on the Small Business Committee. Republicans broadly oppose a $15 minimum wage.

Kevin Kuhlman, vice president of government relations at the National Federation of Independent Business, said he would also be listening for Ms. Guzman’s view on how the Biden administration’s regulatory agenda might affect small firms. In addition to calling for a higher minimum wage, the Biden administration has signaled support for increased workplace-safety rules to combat the spread of the coronavirus.

The NFIB opposes a $15 minimum wage.

Mr. Kulhman said many new regulations in quick succession could pose challenges for small firms recovering from the downturn.

“If the environment is one that stresses enforcement and paperwork requirements and increased compliance,” Mr. Kuhlman said, “that could negatively impact the small business economy overall.”

Write to Amara Omeokwe at [email protected]